Trans Pacific Insurance Corporation (In Liq) v Aradlay Investments Pty Ltd

Case •

[2016] NSWSC 755

•

07 June 2016

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Trans Pacific Insurance Corporation (In Liq) v Aradlay Investments Pty Ltd [2016] NSWSC 755
Hearing dates:7 June 2016
Decision date: 07 June 2016
Jurisdiction:Equity - Commercial List
Before: Stevenson J
Decision:

Liquidator justified in settling proceedings on basis proposed

Catchwords: CORPORATIONS – application for approval by liquidator under ss 477(2A), (2B) and 479(3) Corporations Act 2001 (Cth)
Legislation Cited: Corporations Act 2001 (Cth)
Insurance Act 1973 (Cth)
Cases Cited: Re One.Tel Limited [2014] NSWSC 457; 99 ACSR 247
Category:Procedural and other rulings
Parties: Trans Pacific Insurance Corporation (In Liq) (Plaintiff/Applicant))
Aradlay Investments Pty Ltd (First Defendant/Respondent)
Triton Pastoral Company Pty Limited (Second Defendant/Respondent)
Ian Lindsay Douglas (Third Defendant/Respondent)
Gregory John Bunt (Fourth Defendant/Respondent)
DF Hold Pty Ltd (Fifth Defendant/Respondent)
Representation:

Counsel:
M A Jones SC with C O Gleeson
S Clemmett (Second, Third and Fifth Defendants)

  Solicitors:
Corrs Chambers Westgarth (Plaintiff/Applicant)
Carneys Lawyers (First, Second, Third and Fifth Defendants)
File Number(s):SC 2012/330148

EX TEMPORE Judgment (REVISED)

  1. The plaintiff, Trans Pacific Insurance Corporation (in liquidation) (“TPIC”) is incorporated in the Cayman Islands. It was an unauthorised foreign insurer, as that expression is defined in the Insurance Act 1973 (Cth). It carried on its business in Australia through underwriting agents as an indemnity insurer.

  2. On 18 June 2009, Mr Brian Silvia was appointed by this Court as liquidator of TPIC. On 11 January 2011, he was appointed as joint liquidator of TPIC by the Grand Court of the Cayman Islands.

  3. TPIC commenced these proceedings on 23 October 2012 against two former directors, and a number of companies, seeking damages for alleged breaches of duty and recovery of various debts.

  4. The matter was set down for hearing in this Court for 12 days commencing 22 February 2016.

  5. Shortly before that date, the matter settled in principle.

  6. The settlement was subject to Mr Silvia obtaining this Court's approval to the settlement pursuant to ss 477(2A), (2B) and 497(3) of the Corporations Act2001 (Cth) and to the Grand Court of the Cayman Islands giving corresponding approval.

  7. The proposed settlement is now incorporated into two deeds of settlement, copies of which are before me as attachments to Mr Silvia’s affidavit.

  8. The principles relevant to an application such as this are well known and were summarised in Re One.Tel Limited [2014] NSWSC 457; 99 ACSR 247 at [26] per Brereton J:

“In reviewing the liquidator’s proposal, the court pays due regard to his or her commercial judgment and knowledge of all of the circumstances of the liquidation, but satisfies itself that there is no error of law or ground for suspecting bad faith or impropriety, and evaluates whether the proposal is consistent with the expeditious and beneficial administration of the winding up. …the court’s approval is not an endorsement of the proposed agreement, but merely permission for the liquidator to exercise his or her own commercial judgment in the matter. Thus the approval confers, or completes, the liquidator’s power to enter into the transaction, but does not amount to the court approving the transaction itself.”

  1. The terms of settlement are confidential but, as Mr Jones SC and Ms Gleeson (who appeared for Mr Silvia) said in their written outline, “are wholly directed at the commercial outcomes of the litigation”.

  2. They reflect a practical assessment made by Mr Silvia, a vastly experienced liquidator, of the competing virtues of continuing with the proceedings, with all the attendant risks of following that course, compared to settling on the basis proposed.

  3. Mr Silvia has also considered the money the plaintiff is likely to recover if it were to be successful, and the likely costs of litigation, including the costs of an external litigation funder.

  4. I am comfortably satisfied that Mr Silvia is justified in settling the proceedings on the basis proposed.

  5. I make the following orders:

  1. Pursuant to s 479(3) of the Corporations Act 2001 (Cth) (“Act”), the liquidator is justified in entering into and performing the Deeds of Settlement which are at tabs 2 and 3 of Exhibit BRS-1 to the affidavit of Brian Raymond Silvia sworn on 3 June 2016 (“Deeds”), and procuring the plaintiff to do so.

  2. Pursuant to ss 477(2A) and (2B) of the Act, the liquidator has approval of the Court to compromise debts in accordance with the Deeds, and to enter into the Deeds notwithstanding that obligations under it may be discharged by performance more than three months after it is entered into.

  3. I stand the proceedings over to the Commercial List on 2 September 2016 for further directions.

  4. I order that the exhibits be returned.

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Decision last updated: 09 June 2016

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Cases Cited

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Statutory Material Cited

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Re One.Tel Ltd [2014] NSWSC 457